Front Matter

Front Matter

Author(s):
Paulo Drummond, S. Wajid, and Oral Williams
Published Date:
January 2015
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    The Quest for Regional Integration in the East African Community

    EDITORS

    Paulo Drummond, S. Kal Wajid, and Oral Williams

    © 2014 International Monetary Fund

    Cover design: IMF Multimedia Services Division

    Cataloging-in-Publication Data

    Joint Bank-Fund Library

    The East African Community : quest for regional integration / editors: Paulo Drummond, Kal Wajid, and Oral Williams. – Washington, D.C. : International Monetary Fund, [2014].

    p. ; cm.

    Includes bibliographical references and index.

    ISBN: 978-1-48436-441-3 (Paper)

    1. East African Community. 2. Africa, East – Economic integration. 3. Monetary unions – Africa, East. 4. Customs unions – Africa, East. 6. Social integration – Africa, East. I. Drummond, Paulo Flavio Nacif, 1966- II. Wajid, Syed Khalid S. III. Williams, Oral. IV. International Monetary Fund.

    HG1342.E32 2014

    Disclaimer: The views expressed in this book are those of the authors and do not necessarily represent the views of the International Monetary Fund, its Executive Board, or management.

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    Foreword

    The East African Community (EAC) is a unique regional entity that was established in 2000 with a clear road map for establishing a Customs Union, Common Market, Monetary Union, and, ultimately, a political federation. The EAC Customs Union Protocol came into force in 2005 and the implementation of the Common Market Protocol commenced in 2010. The EAC Monetary Union (EAMU) Protocol comes into force in 2014. These stages of integration are being implemented in a progressive manner and major strides are being made to establish a political federation. The EAMU Protocol is a key milestone on the road to a single currency area in 2024 upon fulfilment of the key macroeconomic convergence targets.

    Economic integration is benefiting the East African people through increased efficiency and productivity, and the entry into a single currency will eliminate bilateral foreign exchange risk, reduce transactions and accounting costs for intraregional trade, and foster financial integration. This will facilitate the expansion of regional trade and investment, which will promote economic growth and cross-border financial transactions, resulting in lower interest rates.

    This book is being produced at a time when critical economic reforms are being undertaken in fiscal, monetary, and exchange rate policies to achieve the EAC macroeconomic convergence criteria which are a major cornerstone in the EAC currency union arrangement. The book catalogs recent developments and presents ideas for the way forward on harmonization and coordination of fiscal, monetary, and financial policies, including strengthening and harmonizing the institutional framework underpinning these policies, as well as statistical harmonization and public financial management. It elaborates the framework for the formulation and implementation of monetary policy aimed at ensuring low and stable inflation and strong growth, discusses the alternative exchange rate arrangements in the transition to monetary union, and outlines the necessary regional financial stability framework. In doing so, it also draws on the different experiences of other currency unions.

    The path to single currency will go hand in hand with sustainable and robust economic growth and undertaking the necessary investments in infrastructure. The EAC region has had recent discoveries in oil and natural gas, which, if well utilized through an EAC-wide coordinated revenue management framework complemented with robust macroeconomic policies, will raise the standard of living of the East African people. I appreciate the commitment of the authors in producing this book, which is an important contribution toward establishing a robust macroeconomic framework for the EAC region.

    Ambassador Dr. Richard Sezibera

    Secretary General

    East African Community

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